Focus Shifts in Sustainability Strategy

Sustainability has become an important part of every company’s strategy in recent years. The noticeable effects of climate change, the ever-increasing demand for resources, and the rapid acceleration of digitalization are imparting ever greater urgency to the topic even now. Investors, consumers, legislators, and society as a whole are putting increasing pressure on companies to do their part to avert the impending climate crisis. We see five shifts in focus that now will take center stage for telecommunications operators.

1. Moving from Scopes 1 and 2 to Scope 3 emissions

By the end of this decade, most telco companies will have achieved carbon neutrality in their Scopes 1 and 2 emissions. While a lot of telco companies originally set their carbon neutrality goals for 2035 or 2040, these targets have been pulled forward in recent years, and the continuation of this trend will lead to a mostly carbon-neutral industry in 2030. In consequence, the focus in 2030 will be on Scope 3 emissions.

Some operators are already beginning to address the topic by regarding more and more closely the impact of their products at the level of households and industrial clients. The primary questions here should not be limited to the measures required to make products and services energy- and resource-efficient, but encompass as well helping customers to save energy and resources so that they live and work more sustainably. As the share of renewable energies in the overall energy mix continues to grow and more and more links of the supply chains set a target of 100 percent for the use of renewables, attention is shifting to the CO2 footprint for the extraction and processing of resources.

The use of renewable energy in operational activities will generally be taken for granted and no longer be a major focus of sustainability measures. Instead, the production of all telco-related hardware — from the network architecture to consumer devices — and the full length of its supply chain will concentrate primarily on resource efficiency, circular design, and the recycling of discarded equipment

The Greenhouse Gas Protocol (GHG) reporting standards

Source: Greenhouse Gas Protocol

2. Energy efficiency indispensable for the energy transition

Although the energy transition will be well underway by 2030 and a lot of companies will be covering almost all their energy requirements from renewable energy sources, total energy demand will continue to rise, putting the worldwide energy transition at risk. Counteracting this risk will demand an increase in energy efficiency of several orders of magnitude.

Telco operators have significant energy demands and will have to find ways to become more energy-efficient at every level of their operations. Similar to the issue of emissions, they will need to consider carefully up- and downstream activities. How can routers, access points, consumer devices, and the production and sourcing of these devices be designed to consume the lowest amount of energy possible? As IoT devices and connected devices are implemented in every phase of production and logistics, longevity and energy requirements of these devices must be optimized as well to make sure that they do not negate the sustainability and efficiency gains they promise.

3. Managing an increasing demand for resources

Demand for resources will skyrocket — even if the adoption of IoT devices is not taken into account. Because of the development of 5G (and 6G), the growth in satellite internet services such as Starlink, and the laying of millions of kilometers of new optic fiber cables underground, the demand for resources and their use in the telco industry will increase significantly. Since there will certainly be parallel rises in prices, efficiency in the exploitation of resources and the reusability of employed resources will become even more important.

The benefit of a technology and its use cases must be very clear, and the right solution and technology must be chosen for every new access point on the basis of a resource use-benefit analysis and energy consumption and not solely on the criteria of technological feasibility and price. What is the right solution for each specific situation? Can we really afford to accept the destruction of the low-orbit satellites required solely to provide service to remote areas along with all the resources they contain every five to seven years (the expected lifetime of these satellites), just to give one example? Or would “traditional” mobile access with upgradeable and recyclable access points be the initially more resource-intensive, but more sustainable option? Which 5G and 6G frequency bands offer the best trade-off between the number of antennas that must be installed and the latency and possible traffic for what area and use case? These are only some of the questions that will inevitably confront telcos in 2030.

4. The end of the traditional annual smartphone upgrades

Another important question impacts directly the business model of a typical operator: how to service customers in a world where constant connectivity is expected and most device upgrades and new features will be provided in the form of software rather than hardware. The classic business model of selling consumers a new device every year with incremental upgrades to the hardware is doomed to extinction.

Consumers will choose a relatively pricey, resource-intensive hardware device based on their individual requirements (rollable/foldable screen, weight, size adaptability for different tasks) once and expect to be able to use it for several years, perhaps even decades. Repairability, upgradeability, computing power as a service, and other factors will be more important than screen resolution or camera sensor size. New features and improvements will still be expected, but as software rather than hardware updates.

5. Actually realizing development goals

The Sustainable Development Goals (SDGs) of the UN set ambitious targets for the global community intended to improve the world we live in and, among other objectives, eradicate poverty and hunger by 2030. They have been incorporated into sustainability reporting by many companies in recent years.

For many companies, the integration of the SDGs into their strategy policies has been little more than lip service. Often enough, previously existing initiatives and social projects have simply been aligned to the more or less matching goals and included in the sustainability report to make a good PR story. The progress in these goals is continuously measured by the UN, and what has actually been achieved will become clear in 2030.

As it is likely that not all goals will have been completely reached by then, new revised goals will follow and the importance of companies and their actions in achieving these goals will only increase. Telco operators are uniquely positioned to make major contributions to meeting these targets. The spread of digitalization and the services they provide can facilitate the essential public-private partnerships and can aid in the implementation of tools used to make progress toward almost every goal and sub-goal. Telco operators wishing to truly commit to achievement of the goals should measure their actual impact on the SDGs and the latter’s potential successors and actively use these impact measurements to develop new solutions that are marketed to the public and private sectors alike.

Thanks to our alumnus Jonas Kowalski for his work on this article!